Thursday, May 3, 2012AFP

BEIJING -- China and South Korea said Wednesday they would formally begin negotiations on a free trade agreement (FTA) this month, Chinese state media reported, with the talks expected to take two years.

Chinese Commerce Minister Chen Deming and South Korea Trade Minister Park Tae-ho made the announcement in Beijing, the official --inhua News Agency said.

It said the first round of talks would take place in May, but did not give a specific date.

The two sides agreed in January to launch formal talks after South Korean President Lee Myung-bak visited China.

China is South Korea's largest trading partner and Beijing forecasts trade between the two sides will reach US$300 billion by 2015, up from US$245.6 billion last year, according to Chinese customs data.

The FTA will cover goods, services, intellectual property rights and investment among other areas, --inhua said.

“The launch of the (free trade agreement) negotiations will be conducive to the economic integration of north Asia and the prosperity and stability of the region as a whole,” Chen was quoted by --inhua as saying.

The negotiations will also include “sensitive” areas of the two economies, such as South Korea's agricultural sector and China's petrochemical, electronics and machinery industries, state radio said.

China's commerce ministry could not be reached for comment.

South Korea's finance minister in January called for early negotiations on a free-trade pact with China so that Seoul can compete against Taiwan in the lucrative Chinese market.

Bahk Jae-wan said a landmark pact between Beijing and Taipei in 2010 put South Korean firms at “a great disadvantage.”